Konopaski claims that his platform offers more flexibility than the majority of dealers. He notes, for example, that some dealers can’t allow advisors to charge less than 80 basis points, leaving advisors at a potential competitive disadvantage, especially with larger accounts. Konopaski attributes that limit to the need for dealer profit margins to grow with the advisor.
“There’s a narrative out there that unless you’re doing it yourself fees are materially eating into your lifetime returns, which is completely false and under values the holistic offering of what an advisor can do for a client. This messaging starts off conversations of fees with advisors with a skewed focus,” adds Kunza. “But because of the innovation in the product world, we see that some of the fee compression is happening, its just not happening at the advisory level.”
Konopaski and Kunza explain that from their experience, fee compression is happening more on the product side. Because of the rise of ETFs, asset managers have been lowering costs for years, taking less of a slice from advisors’ overall fee. One of the keys, therefore, to maximizing advisor compensation without raising fees is opening up the product shelf to advisors. Flexibility, once again, becomes a source of advantage.
That flexibility from the dealer, Kunza says, can make a huge difference in winning over large clients or the potential heirs to generational wealth. Allowing advisors to manage their fee structures more flexibly as well as choose products from an open shelf can result in stronger and longer client relationships.
Flexibility also allows for an advisor to determine the full scope of their practice and charge for it. Konopaski notes that some dealers mandate a raft of estate and tax planning services in their advisory practices. Some of those firms will make investments to provide those services, but the investments are then represented in their share of an advisor’s fees. Other firms may pay lip service to these service offerings, without making the requisite investments.